Has Written Consent been given for that Exclusive Use By-Law?

An owners corporation may amend, repeal or add by-laws in accordance with the Strata Schemes Management Act 2015 (the Act). Commonly, lot owners seek to make common property rights by-law to gain rights to exclusively use certain parts of the common property for purposes including car parking, storage and to carry out renovation works. Accordingly, it is important that lot owners and owners corporation are aware of the requirements for written consent when making or changing common property rights by-laws.

What is required under section 143?

The general proposition under section 143 of the Act is that, for a common property rights by-law to be validly made changed, an owners corporation is required to obtain written consent of the lot owner(s) being affected by such by-law and by passing a special resolution. Having said that,  if the consent if not given, section 143(4) of the Act will presume that all conditions and preliminary steps precedent to the making of the by-law were complied with and performed after two years from the making of the by law. That means, the absence of written consent will not invalidate a common property rights by-law after two years of passing of the special resolution.

a) Time limit when challenging the validity of by-law

In Khadivzad v The Owners – Strata Plan 53457 [2019] NSWSC 157, the scheme previously had a special by law granting exclusive rights to certain lot owners to use parts of common property for car parking. This special by-law was subsequently repealed at a general meeting in 1999 by special resolution of the owners corporation. However, no written consent were obtained from the lot owners benefited under this special by-law and the lot owners did not commence proceedings to challenge the validity of the repeal of the special by-law until 2018 where one of the lot owners alleges the special resolution was not effective to validly repeal the special by-law because the written consent of the affected lot owners were not obtained. The Supreme Court of NSW acknowledged that obtaining written consent is a condition or preliminary step for the making of a by-law under the Act but given the limitation period under section 143(4) had passed since the passing of the special resolution, it had been conclusively presumed that the consent requirement was fulfilled.

The court further established that “the mere writing of a letter of complaint cannot itself affect the validity or effectiveness of a by-law…or be considered a ‘challenge’ to a by-law”. Therefore, if you propose to challenge the validity of the repeal of a special by-law or to establish that the special by-law remained in effect, you must initiate proceedings within 2 years from the date the special resolution is passed.

b) What constitutes ’written consent’?

Generally, there is no set rules on how a written consent should be given and in what format. As demonstrated in  Williams v The Owners – Strata Plan No 3192 [2018] NSWCATCD 77, the applicant had submitted a letter to the respondent stating “we will provide signed consent forms at your request, when it is known what the date of the general meeting will be”. The Tribunal confirmed that the mere writing of this letter constituted written consent of the applicant and was sufficient for the purposes of ss143(1) and 108(5) of the Act. The purpose of written consent is to ensure that no special by-law imposes obligations on lot owner affecting common property rights without their knowledge or consent.

c) Can a compulsory appointed strata managing agent give written consent on behalf of a lot owner?

In the case of James v The Owners Strata Plan No. SP 11478 (No 4) [2012] NSWSC 590, the Supreme Court of NSW considered the issue of whether a compulsory appointed strata managing agent could give written consent on behalf of the relevant lot owners under s143(1) of the Act. It was held that although the strata managing agent was given the powers of the owners corporation, the strata committee and office bearers of the strata committee, he was not given any of the powers given to an individual lot owner under the Act and his purported consent on behalf of individual lot owners was deemed ineffective. The Court explained the reason being: “when a lot owner gives consent under s 52 [now s143], the lot owner is not giving that consent as an organ of the owners corporation. Rather, the lot owner is giving that consent in a personal capacity. The requirement of consent is necessary because that owner’s personal rights will be affected by the by-law.

Key takeaways

The key take away from the above cases are:

  • If a common property rights by-law has been made or repealed without the written consent of the respective lot owners, proceedings must be initiated within the 2 years from the date the by law is made/amended, as required under section 143(4) of the Act;
  • A mere letter of complaint is not an appropriate means to challenge the validity of the by-law once that is passed by special resolution.
  • Written consent can be provided in many different shapes or forms as long as the by-law is not imposing obligations on lot owners affecting common property rights without their knowledge or consent; and
  • A compulsory appointed strata managing agent does not have the capacity to provide written consent on behalf of a lot owner.